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It seems the new beta 2.1 (not to be confused with update 2.0.1, which will fix some bugs in the current firware) update will add some improvements to the GPS aspect of the phone. The phone will not only know where you are, but what direction you are going and at what speed. I guess we'll have to wait and see.

cash edit: Here is the release notes for the SDK for 2.1 from an anonymous tip.

This is the ﬁrst beta of the iPhone SDK targeting iPhone OS 2.1, including bug ﬁxes to
iPhone OS as well as an early implementation of the Apple Push Notiﬁcation Service
API. This API is not yet integrated with a live push server.

Advisories
NOTE: iPhone SDK will run on Intel-based Macs running Mac OS X v10.5.3 and later.
• Use iPhone OS 2.1 beta 1 for development only. This new version should only
be deployed on devices dedicated for iPhone OS 2.1 beta 1 development and
cannot be used for developing iPhone OS 2.0 applications.
• Updating devices to iPhone OS 2.1 beta 1. By installing the iPhone OS 2.1
software beta on your Authorized Test Devices, these Devices are permanently
“locked” into testing mode and cannot be restored to iPhone OS 2.0.